updated 11:30 pm EDT, Wed March 23, 2011

FCC doubts ATT T-Mobile deal goes unchanged

An anonymous FCC official on Wednesday night said that the proposed AT&T buyout of T-Mobile would very likely go through major changes if it were to be approved at all. He was careful to note the deal hadn't yet been under formal investigation but was confident FCC chair Julius Genachowski would either require conditions or ban the deal. The WSJ didn't learn which of the two was the more likely but was told a greenlight was a virtual impossibility.

"There's no way the chairman's office rubber-stamps this transaction," the FCC staffer said. "It will be a steep climb to say the least."

Deals like the Verizon-Alltel merger have usually required that the acquiring carrier at least divest some of their cellular licenses so that a smaller carrier can buy them and improve its network. Other options for the FCC could include mandating price limits, roaming agreements, or net neutrality terms. Such terms can sometimes be limited to a certain number of years under the assumption they won't be necessary later.

AT&T has so far maintained that it's confident the $39 billion takeover will be approved and has used a patriotic angle to try and placate the FCC. Among the promises have been the spread of LTE to 95 percent of the population, job creation, and improved use of wireless spectrum for future broadband. Critics have note that LTE would likely get extra coverage regardless, that the move would consolidate spectrum, and that claims of strong competition were disingenuous given the much smaller sizes of Sprint, US Cellular, and other competitors.

Any attempts to push the deal through might also spur on FCC regulation in the run-up to a final decision. Genachowski confirmed at the CTIA opening keynote that there would be a vote on data roaming at an April 7 FCC meeting and that he would push for lower roaming rates and required roaming agreements. Advocates of the idea, including Genachowski, have suggested that the current situation could let incumbents like AT&T and Verizon shut out rivals by either refusing a roaming deal or negotiating unfair rates.